The 22-year-old has already been the subject of a bid from former Swans boss Brendan Rodgers – who is now in charge at Anfield.
Laudrup, though, has pointed to the fact that Liverpool spent £17million on Jordan Henderson last summer, and he feels that Allen should cost more.
“He is worth a lot of money because he’s a good player,” said Laudrup.
“The manager knows him and knows if he wants to change the way Liverpool play he needs a player in the midfield like Joe Allen.
“But he also knows he’s very, very expensive. We saw they bought a couple of midfielders in the last few years for a lot of money, but with all due respect Joe is on a level above.
“In my opinion, if one is worth £17m then Joe is worth more, perhaps over £20million. I’m talking as a football man not as a chairman but if the chairman asks my advice then I will tell him the same.”
It is understood the offer Swansea rejected last month included Jonjo Shelvey moving on a season-long loan to the Liberty.
But Laudrup says he will not accept an offer that includes a player not considered first-choice at Anfield.
When asked about the possibility of an exchange, he said: “If we could have (Luis) Suarez … We have good players here and they have good players, but I can’t see a player not in the starting 11 at Liverpool being in the starting 11 in our team.
“They might want to do it because they can pay less money.”
While Allen continues to be linked with Liverpool, Laudrup is still looking to strengthen his squad, and the Dane says he is closing in on two more additions, believed to be a striker and a winger.
“One is quite close but the other one is more difficult,” he said.
“But I hope he will be an important player for us. He is playing at quite a big club so it’s not that easy. They are both offensive players. One can defend as well.
“We are also working on other alternatives.”